News

Melbourne-founded smartphone mount manufacturer Quad Lock is considering a run at the ASX boards after a strong bout of growth during the pandemic that will see the company’s revenue top $100 million this year.

The business was founded by Rob Ward and Chris Peters in 2011, initially starting off as a crowdsourcing project for a sturdy iPhone mount for cars and bicycles. It rapidly gained popularity in cycling circles both locally and internationally to the point where the product has gained Kleenex-like levels of customer recognition, Mr Ward said.

“If you look at Google Trends, at one point the term ‘Quad Lock’ actually outgrew the generic search term of ‘iPhone bike mounts’, so we’re definitely the best known in the space,” he told The Age and The Sydney Morning Herald.

“We were the first of the case-based mounting solutions, and now everything out there, when new products come out, everything is comparing to us.”

In 2020, Quad Lock reported revenues of $47.5 million, which nearly doubled to $88.6 million in 2021. The business expects to crack $100 million in sales this year.

Mr Ward and his team are hoping to leverage its trajectory and popularity to further expand the business. Having taken on funding from local private equity powerhouse and Adore Beauty investor Quadrant in late 2020, the founder is frank about further corporatisation of the business being on the cards.

“When private equity buys into a company like ours there are three things on the cards: more private equity, an IPO, or a trade sale,” he said. “All three are an option, and we don’t have a preference for one over the other, but I do think as the business grows I’m not sure who a trade buyer would be.”

Preparing for these potential outcomes, Mr Ward has spent the last few years further corporatising the business, improving Quad Lock’s governance and bringing in a few heavy-hitting executives, such as former Catch chief financial officer Mark Spencer who joined the business last year.

But despite the business’ growth during the pandemic, Mr Ward said Quad Lock hasn’t been exempt from the same logistics and manufacturing woes plaguing other consumer goods brands, most notably the semiconductor shortage which has affected some of the company’s newer, high-tech products.

“We’d get a big product ready, plan to launch it, then find out we couldn’t get enough of that chipset and have to redo the whole product,” he said. “So it hasn’t been easy, but we haven’t been stopped in any major way.”

Quad Lock’s products are also quite high margin, Mr Ward said, which allowed the business to spend more to ship its goods internationally even when shipping rates exploded due to the virus.

Outside of a possible ASX listing, his focus is on building out the business-to-business side of the company and launching new product ranges, though the founder noted they would not be straying too far from the company’s roots.

“If anything, more and more of what we do is just doubling down,” he said.

Australia’s famed RM Williams boot could start being made from a plant-based leather alternative following a $26 million investment by mining magnate Andrew Forrest in a US sustainable textiles company.

Forrest’s Tattarang investment firm announced on Tuesday evening it had backed Illinois-based Natural Fiber Welding’s $US85 million ($114 million) series B investment round, pouring in $US20 million ($26.8 million) alongside a raft of high-profile investors such as BMW and Ralph Lauren.

Natural Fiber Welding’s (NFW) main products are Clarus, a collection of high-performance sustainable textiles, and Mirum, a plastic-free, plant-based leather alternative that is fully biodegradable.

It’s the latter that Tattarang is eyeing as a product that could potentially be used by another one of the firm’s investments: RM Williams boots. Tattarang chief investment officer John Hartman said Mirum could provide “wide-ranging” opportunities for the iconic Australian brand, though stressed the company’s core range would remain traditional leather.

“Leather is of course deeply entwined in the DNA of RM Williams, and we have no plan to change that, however we know consumers are increasingly seeking high-performance, plastic-free leather alternatives. NFW could provide an opportunity for us to further explore this with RM Williams,” Hartman said.

“Aligning with Andrew and Nicola Forrest’s ultimate goal to eliminate all plastic waste through the initiatives of Minderoo Foundation, Tattarang and RM Williams are on a journey of continuous improvement to remove plastics and other synthetics from our supply chains.”

Forrest acquired RM Williams in late 2020 as part of a $190 million deal, which was posed as a return of the company to Australian hands after years of foreign ownership. Following the acquisition, the company said it would focus more on sourcing Australian-made leathers for its boots, and bring as much of its boot manufacturing back to Australia as possible.

If RM Williams were to use NFW’s leather-like products, it would not be the first Australian company to do so, with Fitzroy-based bag and wallet maker Bellroy also making a line of Mirum-based accessories. Global brands such as H&M, Allbirds and Alexander McQueen have also used NFW’s textiles in their products.

“The textile industry is one of the world’s oldest and true innovation is rare,” Hartman said. “We see NFW and its patented technologies as a genuine disruptor with a significant addressable market delivering products that are sincerely better for human and ocean health.”

NFW intends to use the proceeds from its raising to further scale the business to meet the demand for its products, along with expanding its offerings into moulded composite materials.

This week, electronics retail group Winning launched its new online furniture, bedding and appliances destination Andoo. 

And while the product range is more varied than some of Winning’s other businesses, and it targets more affordable prices, Andoo also represents a group mentality shift towards sustainability.

“We’ve always said our mission is to provide the best shopping experience in the world,” Winning Group’s chief marketing officer Sven Lindell told Inside Retail. 

“But moving forward, our mission is to provide the best, and most caring, shopping experience in the world, and for the world.”

Andoo offers to remove and recycle its customers’ old appliances and mattresses as part of its delivery process. Appliances Online, one of Winning’s online businesses, also takes and recycles appliances during the delivery process, and is one of Australia’s biggest recyclers of e-waste.

According to Lindell the group was already heading in a more sustainable-focused direction with appliances, and it made sense to expand this effort into other parts of the group. 

“We want to make sure we can offer the same amazing [recycling] service across all parts of the home,” Lindell said. 

“This isn’t about just doing what we know, it’s about revolutionising the way big, bulky items are handled and reducing the waste for not only our business, but for all communities.

“We want to leave the world a better place for our customers, our people, our communities, and our planet. And [Winning] is the vehicle for us to do that.”

While it’s early days, Lindell said Winning Group will soon unveil a new group strategy and website which will make its vision “a lot clearer”.

Winning Group chief executive John Winning said Andoo was created with a misag the planet and vulnerable communities. With this in mind, at launch, the business donated $500,000 worth of furniture to non-profit organisation Good360 to support flood-affected communities in New South Wales and Queensland.

“Andoo recognises the social and environmental challenges facing our planet, so this partnership [with Good360] works to take more action to improve the experience of the Australian communities that need our care most,” said Winning. 

Broadening the customer base

Andoo may sit well within Winning Group’s focus on the home, selling similar products to some of the group’s other businesses, but it is focused on a different customer segment.

“If you think of brands like Rogerseller and Winning Appliances, the proposition there is all about the premium, and we’re creating a premium environment in those stores,” explained Lindell. 

“But we’re now looking at scaling our operations to service in Australia [and New Zealand], and our online and digital channels are the way to do that.”

According to Lindell, Andoo, Appliances Online and Home Clearance will focus on being more affordable and accessible (being deliverable to over 90 per cent of the country), while Winning Group’s other brands will remain premium offerings.

The business’ upcoming ‘Winnings’ showroom, which will combine Winning Appliances, Rogerseller, and Spence & Lydas’ Redfern stores, will sit within the premium segment.

Winning Appliances general manager Harry Boileau told Inside Retail the new store would act as a destination for customers looking to plan and detail their renovation plans.

“This is definitely not a space where you come, spend $50 and walk out thinking ‘that was a good half an hour’. You’ll want to be fully immersed,” said Boileau.

The chief executive of Levi’s has declared globalisation “dead” following months of supply chain chaos and rising freight costs.

Chip Bergh, chief executive of the 169-year-old denim brand, said: “Everybody knows the supply chain issues that have impacted our business greatly over the last nine months or so, but the other thing that is happening is the geopolitical forces.

“I think globalisation is dead, and this trend where this [apparel] industry has habitually chased the lowest-cost-manufacturing base around the world over the last couple of centuries, I think it’s coming to an end.”

The original Levi Strauss was a Bavarian immigrant who moved to California and went into business in 1853.

Levi’s classic “501″ line became a wardrobe staple in the 1980s and early 1990s. The company now sells its wares in 110 countries.

It decided to move production from America to the Far East in the early 2000s. Mr Bergh told the World Retail Congress in Rome: “The name of the game today from a business standpoint is supply chain resilience and agility.

“When you are missing sales because a ship is parked outside and can’t get to the port and unload containers, and you’re leaving money on the table because the consumer can’t buy the product, that’s a big business issue.” He said that rising cost pressures and inflation were driven by the pandemic, supply chain bottlenecks and shortages of labour in some parts of the world.

Mr Bergh added: “We’ve now realised that [goods] being produced in the lowest-cost countries and putting product on a boat and shipping it to the other side of the world and not getting it to the shelves on time has a cost to it,” he added.

“We’re going to see more manufacturing shifting closer to market because of the importance of that agility and responsiveness and having confidence that the product is going to be on the shelf in store when you need it to be.”

He also warned, companies that failed to adopt “digitisation” as part of their modus operandi post-pandemic would “die”.

“If you are not a tech company today, you are going to be dead in 10 years time. We are an apparel company, but we are quickly becoming a tech company,” he said.

“The rapid move to digitisation is more than e-commerce and building out those digital capabilities for the consumer.

“There’s so much of our business that can be digitised - everything from how we design products to how we manage getting products to store.”

Inflation is well and truly back in the headlines. After years of bemoaning that prices weren’t increasing fast enough, the Reserve Bank of Australiais now grappling with just how soon and how hard it should act to bring inflation under control.

Headline inflation is running at 3.5 per cent and the RBA doesn’t expect it to fall back within its 2 to 3 per cent target range until the middle of next year.

With prices increasing at their fastest rate in a decade, concerns about the cost of living will feature prominently in the upcoming federal election campaign.

But what is inflation, why is it rising, and what can be done to rein it in?

What is inflation and the consumer price index?

Inflation is the rate of increase in the price of the goods and services purchased by households.

Prices generally increase over time, so inflation is usually positive. Since 1990, annual inflation has averaged close to 2.5 per cent, meaning the average cost of what households buy has increased by about 2.5 per cent each year.

While prices across the economy do fall from time to time – a situation known as deflation – these periods are usually short-lived, and generally only occur during economic downturns.

The most well-known measure of inflation is the consumer price index (CPI), which is compiled on a quarterly basis by the Australian Bureau of Statistics (ABS).

The CPI is a weighted average of the price of thousands of different goods and services commonly purchased by households, which are then grouped into 87 different categories like meals out and takeaway food, women’s clothing, and domestic holiday travel.

To estimate the CPI, the ABS aggregates prices from various sources including government agencies, schools, and retail outlets. While some prices are collected in person, the ABS has made increasing use of digital price collection methods in recent years like supermarket scanner data.

The ABS determines what weight to assign each category by reviewing data on how households spend their money. The weights are updated annually to make sure they accurately reflect shifting patterns in consumer spending.

The two largest items in the CPI are the cost of purchasing a newly-built dwelling and rents, which collectively account for about 15 per cent of the index.

The newly-built dwelling measure does not measure changes in house prices, which are not included in the CPI. Instead, it measures the price of a new dwelling excluding the value of the land component. Changes in the price of established houses are excluded from the CPI because they are considered a transfer of an existing asset.

Since reported inflation can be volatile due to large price swings in just a handful of products, economists often focus on measures of underlying inflation.

The most commonly used measure of underlying inflation is the trimmed mean, which excludes those categories of items which had the largest price increases and the largest price falls in a given quarter.

What causes prices to rise?

There is no single cause of inflation. Prices generally increase at a faster rate as the economy strengthens. As unemployment falls, firms are forced to pay higher wages, bolstering consumers’ purchasing power and increasing demand for goods and services.

Prices rise in this situation because households want to buy more than was produced at previous prices.

Because wages are an input cost for businesses, firms may also hike prices to pay for higher wages. This logic extends to changes in other input costs. For example, timber and bricks are important materials for building a new house. If the cost of these inputs were to increase, home builders may raise prices.

Changes in the Australian dollar can cause temporary fluctuations in inflation. A lower exchange rate makes imported items like clothes and furniture more expensive, leading retailers to raise prices. About one-third of items in the CPI basket are sensitive to movements in the dollar.

Sometimes prices rise because supply is constrained. Fluctuations in petrol prices are often caused by changes in the supply of oil rather than shifts in how much consumers want to buy. Similarly, natural disasters can cause widespread supply disruptions which lead to price rises, particularly for fresh food.

Government policies, especially taxes and subsidies, also influence inflation. For example, tobacco prices increased by about 14 per cent per annum between 2013 and 2020 due to the introduction of a new excise indexation regime.

Prices also rise because we expect them to. Economists refer to this as inflation expectations. Peoples’ expectations for how fast prices will rise affect wages growth negotiations and how firms set prices.

Why is inflation finally picking up?

After almost six years of low inflation, underlying price pressures started to intensify midway through 2021.

The increase in inflation has been broad-based across the CPI basket and reflects a combination of factors.

A tight labour market, spurred on by low interest rates and record amounts of government spending, has boosted household demand for goods and services.

The prices of goods have increased strongly as retailers pass through the costs associated with supply chain disruptions and higher shipping prices.

Meanwhile, the cost of building a new house – the largest component of the CPI basket – is increasing at its fastest rate in more than a decade due to a boom in construction activity and record inflation in building material prices.

Is inflation necessarily bad?

It is generally agreed that a low level of stable, positive inflation is desirable.

If inflation is too low, or negative, then households could delay non-essential purchases in expectation of further price declines. Why buy a new television today if you expect it to be cheaper next month?

This would in turn lead to lower spending, which would cause businesses to lower wages or headcount.

What about high inflation?

But while a small amount of inflation is good for the economy, rapidly rising prices can be damaging.

High inflation erodes a worker’s purchasing power over time if prices are increasing faster than their wages.

Rapidly rising prices also alter decision-making. Households and businesses may bring purchases forward if they expect prices to be higher in the future. Businesses may also need to change their prices more regularly.

High inflation can lead to a wage-price spiral, where workers demand higher wages to cope with an increase in prices, which in turn leads to further price increases as firms try to recoup costs.

What can the federal government do about inflation?

While politicians often talk about cost of living pressures, the federal government has limited scope to directly influence how fast prices are rising.

Just one-fifth of the items in the CPI basket by weight are considered “administered prices”, which are goods or services like health, education and utilities for which the government plays a dominant role in price setting.

In many cases, state governments rather than the federal government are the relevant price-setters for these items.

The federal government can indirectly influence inflation through how much money it spends and how much money it collects in taxes, since these decisions impact the economy more broadly.

Why does the RBA target 2-3 pc inflation?

The RBA adjusts interest rates to achieve a medium-term average inflation rate of between 2 and 3 per cent, under a monetary policy framework it calls flexible inflation targeting.

The RBA was one of the first advanced economy central banks to adopt inflation targeting.

When inflation is too low, the central bank lowers interest rates to encourage consumers and businesses to spend money, pushing inflation higher. Interest rate cuts also cause the Australian dollar to fall, which makes imports more expensive and puts additional upward pressure on inflation.

When inflation is too high, the RBA raises interest rates to cool the economy.

Then governor Bernie Fraser announced the 2 to 3 per cent target in 1993, and it was formally endorsed by the federal government in 1996.

While inflation is currently above the RBA’s target band, the bank has held off raising rates over a concern price pressures could be short-lived. This is because one of the drivers of higher prices has been supply disruptions, which are expected to be temporary.

The bank has also said it wants to see evidence that wages are growing fast enough to keep inflation sustainably within its target range. Wages growth remains weak, though the bank expects it to pick up over the coming year.

Before inflation targeting, the RBA tried alternate monetary frameworks, which failed to deliver stable prices or acceptable macroeconomic outcomes, and throughout most of the 1970s and 1980s, inflation was higher in Australia than in the rest of the developed world.

The central bank’s former deputy governor, Guy Debelle, said in 2018 the 2 to 3 per cent range balanced the trade-offs between inflation being too high and inflation being too low.

“We know that some number higher than a 2 to 3 per cent rate of inflation will materially enter decision-making, because we have had plenty of experience of higher rates of inflation that demonstrates that. How much higher though, we don’t really exactly know,” he said.

Not all prices will grow within the 2 to 3 per cent range. Some goods will become more expensive relative to other goods over time due to structural changes in demand and productivity. These relative price shifts provide a signal to the economy about how to allocate resources efficiently.

What you need to know about inflation right now

• Expect the price of milk, yoghurt and other dairy items to spike, cheesemaker Bega warns, as local manufacturers face the worst labour and material shortages since the 1970s.
• Logistics companies are hitting customers with fuel surcharges of around 20 per cent after the national price of diesel soared to more than $2 per litre.
• In the rental market, tenants are being forced to compete from a smaller pool of properties and as a result rents are expected to surge by 15 per cent this year, which will also stoke inflation.
• Frustrated workers will no longer accept pay rises of 3 or 3.5 per cent a year, unions say, as consumer price inflation heads towards 5 per cent.

The chief executive of outdoors and surfwear retailer Kathmandu has warned it may have to start raising its prices in certain markets as inflationary pressures and a shortage of key materials for products such as wetsuits batter the business.

On Wednesday Kathmandu, which recently renamed itself KMD Brands to reflect its 2019 acquisition of Rip Curl, told investors it had made a loss of $NZ5.5 million ($5.13 million) for the six months through to the end of January, a decline of 124 per cent on the prior corresponding half.

Chief executive Michael Daly told The Age and The Sydney Morning Herald the loss was “understandable” given the impact lockdowns and other COVID-related pressures had on the business during the period.

Mr Daly said two of the company’s three brands - footwear business Oboz and Rip Curl - had been acutely affected by supply chain issues and the rising cost of goods in recent months, with a low availability of synthetic neoprene rubber leading to a shortage in Rip Curl’s popular wetsuit ranges.

“On the back of wars, rising fuel prices, we are starting to feel the impact of those inflationary pressures across the board at the moment,” he said

“It’s hard to go a day at the moment without getting a letter from some supplier saying ‘by the way, your prices are going up’.”

Kathmandu will be able to absorb some of the price rises, especially in its Australian and New Zealand markets where favourable exchange rates soften the blow. However, international markets will not be as lucky.

“In the US market where we buy products, and we buy raw materials in US dollars there’s nowhere to hide. So in that market, we’re having to be more pragmatic about price rises.”

Revenue at the business fell slightly, down 0.8 per cent to $407 million. Kathmandu declared a 3 cent dividend, a 50 per cent rise on last year’s interim dividend. Shares rose slightly to $1.28 following the result.

Rip Curl, which has been Kathmandu’s key earner in recent years, had a sales uptick of 2.7 per cent for the half but also saw its earnings slide 30 per cent to $33 million. Oboz also had earnings fall by 30 per cent as it was heavily affected by a three-month closure of its key factories in Vietnam.

“It’s hard to go a day at the moment without getting a letter from some supplier saying ‘by the way, your prices are going up’.”

KMD chief executive Michael Daly

However, it was the company’s namesake brand that performed the worst over the half, with sales at Kathmandu declining 0.8 per cent to $128 million, and earnings diving nearly 300 per cent to a loss of $26.3 million.

Kathmandu did not provide any quantitative outlook for the second half of the year, however, Mr Daly said he was hopeful for a winter period unaffected by lockdowns.

“Kathmandu hasn’t been able to trade its peak winter season freely since 2019,” he said. “So we’re excited to be able to trade a full year with all of our stores for the Kathmandu brand.”

And from a Rip Curl point of view, we’ve had good momentum for some time, so we’re just hopeful of overcoming those wetsuit issues and with no lockdowns, we’ll get to see the full benefits of that brand as well.”

Last week, Kathmandu cut off its Russian distributor due to the country’s invasion of Ukraine, and on Wednesday Mr Daly said the business had no intention of starting to ship products again any time soon.

Premier Retail’s chief executive says there is a long way to go before Sydney and Melbourne’s CBD shopping areas return to normal after the Smiggle and Peter Alexander owner claimed thousands of days in lost trading due to COVID.

Profits at the $4.6 billion retailer dropped by 13 per cent to $163 million for the six months to December, but Premier’s board increased its payout to shareholders after the business posted growth in its key brands despite having storefronts shut due to COVID lockdowns. The interim dividend of 46¢, up from 34¢ a year ago, is payable on July 27.

Speaking to The Sydney Morning Herald and The Age, chief executive Richard Murray said the company had seen some positive results from CBD locations over the past six months, but acknowledged city shopping had not fully recovered.

“There is still a long, long way to go... The reality is that there are still a lot of offices where a material number of workers are not back,” he said.

While shoppers have been willing to return to shopping centres after lockdowns, they have changed the way they purchase in-store, he said. “Customers seem to be very mission-based in their shopping. I think there is still some of the older generations [that] are a little bit more conservative [going shopping].”

Mr Murray said supply chain costs pressures were being felt across the company but that Premier’s team was working hard to manage these. While he would not be drawn on whether customers might see price increases on specific products, he acknowledged the cost may have to eventually be passed on if conditions do not improve.

“There is no doubt some prices will have to move,” he said.

Online sales were up 27 per cent across the group, hitting a record $194.5 million for the six months to December.

Despite closures of many of its bricks and mortar Peter Alexander stores, the sleepwear brand sales grew 11.4 per cent to a record $227.4 million. Peter Alexander has grown sales by 57 per cent since the start of the pandemic, and by 400 per cent over the past decade.

Women’s workwear brand Portmans has also bounced back strongly, with sales up 16.4 per cent to a record $73.1 million for the half. Children’s stationery business Smiggle emerged from lockdowns with sales growth of 5.6 per cent.

Mr Murray and Premier chairman Solomon Lew both pointed to the challenging trading conditions of the past six months, which saw the company’s stores lose more than 42,675 cumulative trading days thanks to lockdowns.

While management warned retail conditions would continue to be tough, the company is optimistic about its ability to perform strongly. “The board notes that the environment, whilst challenging for many businesses, may present new opportunities for the group given the strength of its balance sheet.”

Mr Lew said if the company considered any takeover opportunities, they would be located in the Australian market. “At this point in time, it would be strictly [in] the Australian market. This is our home base and this is where we are domiciled,” he said.

Premier Investments shares slipped 1.6 per cent to close the trading day at $28.48.

Ralph Lauren Corporation has firmed its commitment to expansion in the Australian market, launching a dedicated Australian eCommerce site. 

The site, which went live yesterday, is the first digital platform for the brand in Australia and houses collections including Ralph Lauren Purple Label, Ralph Lauren Collection, Polo Ralph Lauren, including childrenswear and Lauren Ralph Lauren. 

The launch of the website comes after the brand opened a Polo Ralph Lauren store at The Rocks earlier this month.

"The online store opening builds on our targeted expansion across Australia as part of our Next Great Chapter strategy to deliver sustainable long-term growth and value creation," the brand said in a statement. 

The digital store brings Ralph Lauren to customers across Australia and offers them the chance to shop the collection without having to visit one of the brand's local stores or concessions. 

To enhance the customer's online shopping experience, the Ralph Lauren website features live chat, giving customers access to information and assistance when needed. 

The website also offers customers a gifting service which includes a personalised message wrapped in silk paper and beautifully arranged in a Ralph Lauren box with a ribbon. 

Customers can also immerse themselves in the 'World of Ralph Lauren' content hub, which features the brand's stories and information. 

The site is then set to launch Virtusize - a virtual fitting platform that allows them to compare sizes, try on items virtually and create an online wardrobe - in April. 

In June, the Ralph Lauren website will then launch click-and-collect, while later this year, the site will launch the brand's CYO experience, which will allow customers to personalise apparel and accessories with custom printing and embroidery. 

Further, Ralph Lauren will be expanding the shoes and accessories offering across all brands available Australia-wide through the online store.

The site also offers free Australia-wide shipping for orders over $200, eGift cards and a buy now, pay later payment method at checkout. 

Following the launch of the online store, Ralph Lauren will open its first emblematic store in Chadstone on April 04. 

Pre-Covid, augmented reality, the metaverse and livestream shopping were distant concepts for many mainstream retailers. Fast-forward just a couple of years later, and Target is experimenting with AR and even McDonald’s in the US is joining the metaverse.

“We are at the forefront of innovation with social commerce, enhanced retailing and emerging retailing. New and emerging technologies are needed to ride on these trends,” said Joshua Emblin, Territory Director, APAC, at Commercetools. 

“This is why retailers must take advantage of agile infrastructure to successfully capitalise on limitless commerce possibilities and create a truly immersive experience.”

Here are a few of the next generation of retail opportunities for brands, according to the new Social, enhanced, emerging report from Commercetools.

Let’s get social

When Covid hit and retailers were forced to come up with new ways to maintain customer relationships, savvy brands turned their focus to social media, where an increasing number of Australians were now spending their time during the lockdowns. Off the back of that, retailers started selling products exactly where their customers were already spending their time. 

According to Commercetools’ report, the most popular platforms for shoppers to purchase from were Facebook (70 per cent) and Instagram (42 per cent). While TikTok is an emerging platform, purchases from it are significantly less (12 per cent).

While several platforms have recently launched live shopping capabilities, including Pinterest and Twitter, the one to watch is YouTube.

“YouTube is likely to rapidly develop into an effective sales channel in multiple categories and for a wide range of shopper segments,” stated the Commercetools report.

Although 28 per cent of shoppers interact with YouTube, it has not traditionally been possible for viewers to shop directly from the platform, although, a live shopping feature on YouTube15 has just launched. Interestingly, the 65+ demographic is particularly active on YouTube. In the last 12 months alone, that customer base’s social commerce spending has risen 50 per cent, from $10/month to $15/month.

According to the report, as retailers begin embracing more social channels, it’s important that brands ensure that the customer’s experiences are consistent across all platforms. 

This includes ensuring that the customers: 

• Access the same catalogue and products; 

• Enjoy the same campaigns and promotions; 

• Are able to use their loyalty privileges; and 

• Have their purchases captured, fulfilled and serviced seamlessly, regardless of the channels they interacted with.

Exploring the next frontier: AR and VR

From Adidas and Sephora to Ikea and Tesco, forward-thinking retailers have been experimenting with augmented reality and virtual retail for quite some time.

Last year, Gucci collaborated with Snap to launch the world’s first augmented reality shoe try-on campaign. Customers were invited to ‘try on’ four different pairs of the brand’s limited-edition sneakers. Once they had tried the sneakers, Snapchatters could then go straight to the product page and make a purchase via the “shop now” button.

If you think AR is simply for bored Gen Z consumers, think again, as interest is actually strongest among Millennials, who account for one in three of all retail spending in Australia, said the report. Meanwhile, the global AR-in-retail market is forecast to grow at a rate of 47 per cent between 2020 and 2027.

While only 13 per cent of Australians so far have used AR to try on clothes online and some experts believe it won’t be until 2025 that it increases to 18 per cent, 73 per cent feel that they are more likely to purchase items that they had tried on with AR. Indeed, AR and VR have the ability to potentially reduce returns by 31 per cent.

It’s time to listen up: Voice commerce

It’s surprising that voice commerce doesn’t get as much airplay as other emerging retail opportunities, such as the metaverse or AR, especially as 26 per cent of Australians own a smart speaker. Engagement with these devices is high, with 67 per cent using one every day and 88 per cent using them at least once a week, largely to either check the weather (56 per cent), ask a general question (53 per cent) or check the time (50 per cent). At the moment, only 33 per cent of smart speaker owners use their device to interact with a brand, product or service online. Even fewer have used it to purchase a new product (28 per cent). 

However, according to the Commercetools report, there’s still opportunity there for brands.

“While shoppers’ desire to see the item is the most common barrier to e-commerce, it should not necessarily be a barrier to the use of voice commerce to re-order regular items. While subscription services for mainstream retail items typically hover around 5 per cent, around 20 per cent of shoppers are interested in the concept. Voice commerce could potentially address at least some of this market,” stated the report.

“As has been the case with e-commerce, it is likely that over time barriers to voice commerce such as ‘hadn’t thought of it,’ ‘not interested’ and ‘not sure of the process’ will all become less significant” 

While some of these forms of emerging retail may seem like an optional “nice-to-have” by some in the industry, the reality is that forward-thinking retailers know that the key to success is in ensuring that you are exactly where your consumer is.

“The modern consumer is bombarded with a plethora of online shopping channels – social commerce, voice commerce and live shopping,” said Emblin in the report. 

“Truly a modern retailer would be able to engage in commerce anywhere and everywhere, with no limitations and boundaries, to engage the modern consumer.”

• Australia’s gross domestic product increased 3.4% in the December quarter of 2021, new figures show.
• The Australian Bureau of Statistics notes that increase was largely driven by household consumption.
• The increase erased the September quarter’s 1.9% downturn, but new challenges face the economy in 2022.

The Australian economy thundered back to life in the December quarter, with gross domestic product (GDP) rising 3.4% on the back of renewed household spending.

In fresh data, the Australian Bureau of Statistics (ABS) on Wednesday confirmed what bank reports and economists forecast: the nation spent big when restrictions linked to the Delta variant of COVID-19 began to ease.

The growth spurt, which more than erased the September quarter’s 1.9% GDP retraction, was largely driven by private demand.

Household spending was a major driver, spiking 6.3% in the final months of the year.

That increase was most prominent in states which shed their Delta-era lockdowns and business restrictions, said Sean Crick, the ABS’ acting head of national accounts.

“Household spending in NSW, Victoria and the ACT rose 9.6 per cent, compared to the rest of Australia which rose 1.6 per cent,” he said.

Elsewhere, other pandemic-era anomalies kept the economy from growing even further. Private investment fell 1.4% over the quarter, and Crick pointed the finger at supply chain crunches in the construction sector contributing to a 2.2% fall in dwelling investment.

The savings buffer many Australian households accrued through the pandemic are slowly dissipating, the figures add.

The household savings ratio fell from nearly 20% to 13.6%, a figure which remains well above pre-pandemic levels, but still indicates the slow emptying of Australian bank accounts.

The withdrawal of pandemic-era stimulus and support payments is also dragging down the savings ratio. Social assistance fell 1.3% in the quarter, the figures show, helping gross disposable household income fall 0.5%.

Early signs indicate consumer spending may not be as buoyant in the March quarter.

Retail spending through the Omicron wave of COVID-19, which swept Australia from late December, took a pummelling in January, and cafe spending cratered to 40% of pre-pandemic levels in capital cities into February, ANZ noted.

The Russia-Ukraine conflict and its attendant pressures on fuel prices could squeeze Australian household budgets further; while maintaining its dovish approach to interest rates, Reserve Bank of Australia governor Philip Lowe yesterday noted “the war in Ukraine is a major new source of uncertainty.”

For now, though, the response from Australia’s leaders is one of jubilation.

Today’s GDP statistics mark “the equal strongest quarterly growth in 46 years, with Australia’s recovery from COVID outperforming all major advanced economies,” Treasurer Josh Frydenberg said.

“Australia is a world beater.”

Lockdowns and store closures have severely affected David Jones’ first-half performance, with sales turnover and concessions declining by 9.2 per cent.

Online sales rose 44.2 per cent however, and contributed 28.1 per cent of total sales during this period, and comparable store sales fell 9 per cent – only to pick up in the last six weeks of the period, including Boxing day sales, growing 3.2 per cent. 

Store closures and space reductions contributed to a fall in expenses by 1.8 per cent, and the department store’s adjusted operating profit dipped down to 44.6 per cent compared to the same period last year. 

Sister brand Country Road Group reported that sales declined by 3.1 per cent for the half with comparable-store sales dropping by 3.2 per cent only to grow 1.7 per cent in the last six weeks of the period.

Online sales contributed 33.8 per cent of total sales improving by 3.6 per cent during the half.

With restrictions easing post-Omicron outbreaks in the country, the brands are optimistic that foot traffic in stores will increase as consumer confidence recovers. Though it is unlikely that trading will go back to pre-Covid levels, the prospect of an increase in interest rates will have some impact.

The head of major office supplies seller Officeworks has said she expects hybrid home/office working to be a permanent fixture even after the pandemic, as major companies across Australia prepare their workers for a flexible future of work.

Sarah Hunter, Officeworks’ managing director, told The Age and The Sydney Morning Herald the business “absolutely” expected the hybrid model being trialled by workplaces following last year’s COVID lockdowns to be a permanent feature of office jobs in years ahead.

“What we’re seeing is that employers are recognising this is what employees want. And so, it’s going to become - and has already started to become - a really core part of their employment proposition,” she said.

“We think the office environment is going to become very much about that collaborative connection, whereas the home environment is about quiet work time.”

Research carried out by Officeworks shows more than two-thirds of employers expect their workforce to make a permanent move towards flexible or hybrid working, with employees saying they’d like to spend between two and three days in the office a week.

In a survey of some of Australia’s largest companies, conducted by The Age and the Herald last year, the vast majority of employers said they expect their staff to return to the office part-time once the pandemic ends. Since then, many employers have introduced a mandated number of days each week they expect workers to be in the office.

In an effort to capitalise on this, the Wesfarmers-owned retailer has launched a new business-focused service called Flexiworks which will allow employees to purchase various work from home equipment such as ergonomic desks and chairs from Officeworks, funded by their employer.

The service is aimed at providing workers with OHS-approved home office setups, Ms Hunter said, along with giving employers an easy way to manage the expenses headaches that can come from funding these setups.

“It’s a platform that allows a company to effectively subsidise their employee to work from anywhere,” she said. “Without having to worry about all the back office paperwork.”

But while she believes most employers are sanguine about the benefits of flexible work, the executive said some leaders may still need to find a balance on what works for their workforce.

“It is about the balance, and all of us as leaders and as employees, we’re going to have to find a way to find a balance that’s right for the job,” she said.

Officeworks has traditionally aligned itself with small-to-medium sized businesses in the past, but for the first time will look to woo major corporates with its new platform, with Ms Hunter saying the retailer had already seen some preliminary success getting companies on board.

At Wesfarmers’ half-year results last month, Officeworks reported a 3.7 per cent uptick in sales to $1.58 billion for the six months to the end of December, though earnings declined by 18 per cent to $82 million due to supply chain troubles and an influx of lower-margin online orders.

Ms Hunter said the company was continuing to manage the effects of inflation on the business, saying the company was hoping to refrain from price hikes as much as possible.

Woolworths Group says it will open a large Big W store alongside its refurbished Woolworths supermarket at Sydney’s Town Hall later this year

The group has invested more than $10 million, hoping to help reinvigorate the city’s CBD as Covid restrictions ease. 

With the two brands under one roof, city residents and commuters can pick up a broad range of products along with grocery essentials on the go.

“By bringing together Woolworths and Big W in the one location we can improve the local shopping experience for our customers while driving more activity in Sydney’s Town Hall precinct,” said Woolworths Supermarkets MD, Natalie Davis.

City of Sydney Lord Mayor Clover Moore said Woolworths’ Town Hall expansion is a positive step and a “real vote of confidence” in helping the CBD rebound.

“We’re already seeing an upswing of activity as workers begin to return to city centre offices and a release in pent-up demand to be back in town among friends and colleagues, enjoying everything the city has to offer,” he said.

Big W MD Pejman Okhovat said that the Town Hall location will offer great value for city dwellers and workers.

The refurbished setting in the lower level of the Town Hall building will include 150 new gourmet lines, rubs and dressings, an indigenous range, lunch and dinner inspirations, premium sushi offerings and more. To control traffic, reconfigured check-out and wider entrances will help customers move in and out of the store.

Construction is expected to be completed mid-year.

Department store Myer has recorded a strong performance in its half-year results, with net profit after tax hitting $32.3 million – an increase of 55 per cent. 

Myer’s total group sales were up at 8.5 per cent to $1.51 billion, with comparable sales growth of 17.8 per cent. Group online sales grew 47.5 per cent to $424.1 million contributing 27 per cent of total sales.

The business lost 23 per cent of in-store trading days in lockdown, but Myer’s CEO John King expressed that both online platforms and store networks performed well in navigating the challenges faced during this period.

“We are sharply focussed on our plans for the future built on the key growth drivers of online sales, the value of our Myer one program and the delivery of our Customer First Plan, all of which are geared to creating improved value for our stakeholders,” he added.

The group has reported that the first five weeks of the second half has recorded a strong sales momentum both in-store and online delivering 15.2 per cent in sales growth.

APG & Co has announced that its brands Sportscraft and Jag will donate $500,000 worth of unworn stock to Australian charity Thread Together to support flood victims across the Northern Rivers region. 

The donation will see more than 9,000 units of stock go towards flood affected communities who have lost everything to the severe weather event. 

The move builds on the existing relationship between APG & Co and Thread Together, which was forged in 2019. 

Newly appointed APG & Co CEO Elisha Hopkinson said the business wanted to make a meaningful contribution to support the flood victims.

"You can’t help but be affected by the turmoil these local communities are experiencing from this natural disaster, so our business is compelled to provide some form of relief with what we do best. 

"We are so encouraged by the way the country is rallying together to support our fellow Australians in times of need," she said. 

According to Thread Together CEO Anthony Chesler, APG & Co's donation will be distributed through the following channels: 

1. Charity agencies/local charities ordering stock from the online portal to supply to the affected communities
2. Individual reach out directly is facilitated via virtual gift cards being issued for use on the online portal to access the stock as individually needed
3. Pop-up hubs will be located in three areas – in Lismore, Indooroopilly and Milton from next week for the next six months to facilitate the support of the local communities

In addition to its initial donation, APG & Co will monitor the situation to continue its support of the impacted communities. 

Four years after packing its canvas tote and leaving the country with its tail between its cargo shorts, US fashion giant Gap has returned to the Australian market, bringing Banana Republic along for what will hopefully be a smoother ride. If at first you don’t succeed hope that they buy and buy again.

Banana Republic is now available online and in select David Jones stores while Gap has dipped its toes back into Australian waters with a website, taking a different strategy to the six stores it launched nationally, following an unsuccessful partnership with the Oroton Group in 2013.

“Thanks to this wonderful thing called Google Analytics, we know that there is a demand for these brands in this market today,” says Gabriel Bastien-Dietrich, brand manager for Gap and Banana Republic at True Alliance, the labels’ new Australian distributor. “We know that there are 20,000 searches for Gap each month in Australia. A lot of these are from millennials that don’t see it as a boomer brand or passé.”

Founded in 1969, Gap was the go-to store for bright basics in the US during the ’80s and ’90s, with groundbreaking advertising campaigns featuring Madonna, director Spike Lee and even a self-portrait by Chanel designer Karl Lagerfeld in 1993. Actress Sharon Stone raised Gap’s profile on the red carpet, mixing the brand with luxury pieces at the Oscars in 1996 and 1998.

Following strong international competition from Zara and Uniqlo, Gap faded from fashion favour but recently reclaimed credibility with collaborations, such as a 10-year deal with rapper Kanye West’s brand Yeezy, announced in 2020. West worked at a Chicago outpost of The Gap as a teenager and declared in a 2015 interview that he would “like to be the Steve Jobs of the Gap.”

In February, the brand released a capsule collection of Yeezy Gap Engineered By Balenciaga, enlisting the luxury label’s creative director Demna Gvasalia.

“A lot of the collaborations will be approached with a domestic market first,” Bastien-Dietrich says, meaning that US customers will have first dibs. “Yeezy Gap is available, as well as the Demna collaboration, to ship to Australia... we will be able to offer most collaborations to customers here whenever relevant. Some are very obscure and don’t resonate with our market.”

Without the heat of Kanye West and French luxury brands, Banana Republic requires a different approach for Australia, which is why it appears on the racks at select David Jones stores.

“One of the key factors with Banana Republic is the quality of the product,” Bastien-Dietrich says. “You can’t tell how wonderful the hand feel is, how thick the cottons are and the luxury of the cashmere, by looking online. This will help the consumer build trust with the product.”

Mel and Patricia Ziegler co-founded Banana Republic in 1978 using military surplus to create safari-inspired looks for Californian customers. The company was bought by Gap in 1983 and rode an initial wave of success with shoppers keen to emulate the style of Harrison Ford in Indiana Jones and the Temple of Doom.

While maintaining its commitment to neutrals and animal prints, Banana Republic has expanded into the workwear and occasion wear categories, which are already well-catered for in Australia.

“It’s a spot where there are a lot of domestic brands,” Bastien-Dietrich says. “Country Road is certainly top of mind. But there are also customers who want to access quality, fashion pieces at a similar price point that are not as widely spread across the market.”

With US brand J.Crew having filed for bankruptcy protection during the coronavirus lockdowns and disappearing from the racks at David Jones, Banana Republic fills a gap in Australian customers’ enduring attraction to Americana.

“We are really conscious of brands that have a point of difference and a track record,” says Chris Wilson, general manager menswear, David Jones. “It’s collegiate, contemporary and classic which is a favourite men’s and women’s style, time and time again. We already have Polo, Tommy Hilfiger and Calvin Klein in this space so this complements those brands.”

Australian period underwear label Modibodi has teamed up with global sports brand Puma to launch a range of active period underwear.

The partnership will see the brands launch a collection of leak-free period underwear designed to be worn while exercising, helping women feel confident while getting active. 

The partnership forms part of Puma's 'She Moves Us' platform – where the brand celebrates women who move together to achieve and connect – through sport, culture and values.

Puma global director of run/train Erin Longin said it was important for the brand to make access to sport as easy as possible for women and girls. 

"Even in the 21st century, periods and leaks still prevent women from participating in sports.

"Studies have revealed that girls’ participation in sport drops from 69% (ages 11-12) to 45% (ages 13-15).

"Additionally, the single-use plastic from disposable products can continue to pollute the environment for hundreds of years.

"As a global brand, we felt it important to do our part to address this issue.

"The Puma x Modibodi collaboration allows women to stay active, without having to worry about leaks, while reducing their monthly waste from period products," she said. 

The underwear will be crafted using Modibodi's proprietary Modifier Technology which is comprised of three layers.

The first is a soft top layer made of merino wool to wick away moisture and sweat, a quick-drying absorbent microfibre middle layer that removes fluid and odour and additional waterproof protection in the bottom layer. 

Modibodi founder and CEO Kristy Chong welcomed the partnership with Puma. 

"No woman should have to sit on the sidelines of life because they have their period or bladder leaks. 

"We are thrilled to launch this collection with Puma and together normalise menstruation and tackle the stigma that women can't be active on their periods or when experiencing any of life’s leaks," she said. 

To celebrate the launch, Puma and Modibodi will work with Puma's 'She Moves Us' charity partner, Women Win, to donate a bundle pack of five briefs to 500 girls and women in need. 

The packs cover a person for their monthly cycle and will last for up to four years. 

The first Puma x Modibodi active underwear collection will be available in May 2022 in selected stores and online. 

Michael Hill's loyalty program Brilliance has exceeded one million members, the business has revealed in its first half results. 

Reported at 800,000 members at the end of FY21, the jeweller's loyalty program has grown by at least 200,000 in the first half of FY22.  

These loyalty members helped to boost the retailer's digital sales, which increased 37% to $26.7 million, accounting for 8.2% of revenue in the half. 

Additionally, Michael Hill increased its omnichannel capabilities in H1 FY22, launching click-and-collect in time for Christmas. 

Michael Hill CEO Daniel Bracken said the company's transformation strategy is on track.

"Our transformation agenda and strategic initiatives are truly gaining traction – the elevation of our brand across all facets of the business; the Brilliance loyalty program now exceeds more than one million members; deployment of digital-first initiatives including click-and-collect; and, continued focus on retail fundamentals best evidenced by strong lifts in average transaction value, conversion and gross margins," he said. 

During the period, Michael Hill's gross margin increased by 240 bps to 65.1% compared to 62.7% in H1 FY21. 

Group comparable EBIT increased by 15.5% to $51.6 million and statutory net profit after tax was $37.1 million compared to $37.6 million in the first half of FY21. 

And despite losing 20% of store trading days (9,777 days), group same store sales stayed strong, increasing 11.4% to $306.5 million, while operating revenues lifted 2.3% to $327.1 million.

"While we experienced significant disruption across Australia and New Zealand throughout the half, the resilience and commitment of our team was exceptional," Bracken added. 

"I'm particularly proud of the successful planning and execution of Christmas trade which delivered Michael Hill's best Q2 in the Company's history, and was the tenth quarter of positive same store sales growth since Q3 FY19. 

"All aspects of our business contributed to this result, ranging from the highly engaging and emotive marketing campaign, to the deployment of new digital initiatives, excellence in supply chain and inventory management and our Christmas recruitment strategy," he said. 

Michael Hill didn't open or close any stores in the period and ended the half with 285 stores across all markets. 

The jeweller had a closing net cash position of $99.1 million at the end of the half. 

Scentre’s long-serving chief executive Scentre Peter Allen will step down from running the country’s biggest shopping centre owner in September, handing the baton to chief financial officer Elliott Rusanow.

The succession plan was announced as Mr Allen proved his capacity to lead through turbulent times, handing down a strong full-year result, with the Westfield operator shrugging off lockdowns to more than double its payout to shareholders and flagging a further 5.3 per cent lift in distributions this year.

Mr Rusanow, another veteran of the Westfield operation and a grand-nephew of its founder, Sir Frank Lowy, takes charge from October 1 before Mr Allen retires from the company next year. While the result fell short of some analysts’ expectations, Mr Allen’s departure caught shareholders by surprise, with Scentre stock dropping 14¢, or 4.4 per cent, to close at $3.02.

“The business is in a really great position, we’re coming out of an extraordinary 20 months,” Mr Allen said.

“Business-wise, it’s the right time and even for me personally, it’s the right time. I’ve now been involved with Scentre Group over 26 years. I’ve really committed all my efforts and energy to this organisation.”

Scentre’s operating profit of $845.8 million represents 16.32¢ a security, up 10.9 per cent. Funds from operations – the industry’s standard earnings measure – was $862.5 million in total, up 12.7 per cent to 16.64¢.

The statutory result, which includes property revaluation gains, was $887.9 million, up from a whopping loss of $3.7 billion in the previous year, which included hefty portfolio writedowns during the initial wave of COVID-19.

The full-year distribution of 14.25¢ a security exceeded guidance and more than doubled the 2020 payout.

With a further lift in distributions to 15¢ flagged for this year, Mr Allen struck a bullish note as customer visits bounced back after the latest omicron wave, and leasing spreads – the difference between old and new rents – improved.

“The financial strength of the consumer is really positive. Particularly since people have gone back to school and how well that has gone, consumer confidence has improved, and we are starting to see the visitation numbers increasing and therefore dwell numbers increasing,” he said.

A short-term bump in inflation would have little impact on Scentre, according to Mr Allen, while a long-term rise would be positive because it would signal a growing economy.

“If there is inflation that means people are spending money and driving up prices,” he said.

Amid the goodwill, Mr Allen reserved a stinging rebuke for the NSW and Victorian state governments, which have extended a commercial code of conduct allowing rent relief to retailers even though lockdowns are over.

“Governments effectively forcing the transfer of the retirement savings of ordinary Australians via their super funds to benefit businesses that generate millions of dollars in revenue is poor policy,” he said.

Macquarie analysts noted there could yet be further upside to Scentre’s expected distributions, with its guidance falling below market consensus.

But they also said in a client note that, while Scentre maintained that its balance sheet remained robust, “we view the likely widening of retained earnings is being driven by elevated leverage”.

The Iconic has furthered its customer-obsessed position, appointing Dean Chadwick as its first chief customer officer. 

The new role replaces The Iconic's chief marketing officer position and instead combines the marketing and product departments. 

This will see Chadwick lead the product and marketing teams, placing a heightened focus on customer centrality. 

Prior to his role at The Iconic, Chadwick held customer-focused positions throughout his career in both Australia and the UK, most recently serving as interim CEO of Virgin Australia’s Velocity Frequent Flyer program. 

Before his position at Virgin Australia, Chadwick served 14 years at American Express.

The Iconic CEO Erica Berchtold said the new position will help the business advance its offering into the future.

"After a decade of operation, The Iconic is well and truly part of the fabric of Australian and New Zealand life, particularly after the last two years where shoppers across the country have come to rely on our unparalleled assortment and outstanding delivery proposition.

"While we’ll always be proud of our start-up roots, we are a business that is scaling rapidly in a landscape that is constantly shifting, so we needed to rethink our internal structure to set ourselves up for a new era of retail.

"The newly created chief customer officer role does exactly that, bringing together our product and marketing functions to further strengthen our commitment to deliver seamless and inspiring customer experiences, while continuing to define the future of shopping in ANZ.

"With extensive experience in customer-centric leadership roles and a sharp ability to anticipate the needs and wants of customers now and into the future, I am delighted to welcome Dean to the team as he takes up this pivotal position within our business," she said. 

Chadwick's appointment follows significant investment by the eTailer into new categories including home and beauty, marketing campaigns and delivery options. 

Speaking on his appointment, Chadwick said he is excited to bring his experience with customer loyalty to the eTailer. 

"The Iconic has been a business I have long admired.

"Within the industry, The Iconic is renowned for its steadfast commitment to being customer-first, but it wasn’t until I met the team that I really understood exactly how 'customer obsessed' it truly is.

"Every single business decision is made with the shopper in mind, which makes the chief customer officer position incredibly exciting.

"I look forward to bringing my customer loyalty experience to the role as we work to further actualise the future of shopping," he said. 

Chadwick's appointment follows the announcement that The Iconic's chief operating officer, Anna Lee, will step down in June.